Sarchuk,
T.C.J.:—At
the
conclusion
of
this
appeal,
counsel
for
the
appellant
sought
costs
and
submitted
that
they
should
be
awarded
on
a
solicitor
and
client
basis.
He
argued
that
the
appellant
had
substantially
succeeded
in
his
appeal
and
that
the
conditions
set
out
in
Rule
5(1)
of
the
Tax
Court
Rules
of
Practice
and
Procedure
for
the
Award
of
Costs
(Income
Tax
Act)
had
been
met.
He
further
submitted
that
Rules
4
and
5
when
read
in
their
entirety
permit
this
Court
to
award
costs
on
a
solicitor
and
client
basis.
The
fundamental
reason
advanced
in
support
of
this
submission
was
that
an
offer
of
settlement
had
been
made
by
the
appellant
which
was
virtually
identical
to
the
judgment
ultimately
rendered
by
this
Court.
The
failure
of
the
respondent
to
settle
the
issue
was
an
omission
to
do
something
which
would
[have]
saved
costs,
unnecessarily
delayed
the
proceedings
and
was
unwarranted.
I
have
considered
counsel's
submissions
and
have
concluded
that
costs
should
be
awarded
but
on
a
party-and-party
basis.
Ignoring
for
the
moment
the
fact
that
there
was
some
disagreement
between
counsel
as
to
the
terms
of
the
proposed
settlement,
I
would
not
in
any
event
be
inclined
to
award
costs
on
a
solicitor-client
basis.
Costs
as
between
solicitor
and
client
are
exceptional
and
generally
to
be
awarded
only
on
the
ground
of
misconduct
connected
with
the
litigation
(The
Queen
v.
Amway
of
Canada
Ltd.
et
al.,
[1986]
2
C.T.C.
339;
[1986]
2
F.C.
312).
An
award
of
costs
on
a
solicitor
and
client
basis
is
ordered
only
in
rare
and
exceptional
cases
to
mark
the
Court's
disapproval
of
the
parties'
conduct
in
the
litigation
(/saacs
v.
MHG
International
Ltd.,
45
O.R.
(2d)
693;
7
D.L.R.
(4th)
570).
The
submissions
made
on
behalf
of
the
appellant
fail
to
establish
misconduct
which
would
warrant
the
award
of
costs
on
a
solicitor
and
client
basis.
Appeal
allowed
in
part;
party-and-party
costs
awarded.
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